The business behind the show

MySpace, Google renew search and advertising deal

December 16, 2010 | 10:29
am

MySpace and Google Inc. have renewed and expanded their search and advertising relationship under a long-term deal that no longer assures the social network lucrative guaranteed payments, according to a person familiar with the matter.

Google will continue to provide search and the advertising related to it on MySpace, as it has since 2006, and will begin also offering display advertising services.

MySpace will join Google's Display Network of more than 1 million websites that allocate a part of their ad space for Google to sell advertising and share revenue. The social media site also will become part of Google's DoubleClick Ad Exchange, in which online publishers sell display advertising in a competitive auction.

Sustaining a relationship with Google is key to News Corp.'s attempts to revive struggling MySpace, because advertisers have been decreasing their spending on the site. Research firm eMarketer estimates ad spending for this year will fall to $347 million, down from $470 million a year ago. Advertising revenue for MySpace is projected to drop again in 2011, eMarketer projects, even as the overall search advertising market expands.

A MySpace spokeswoman declined to say how much of the site's revenue is derived from its partnership with Google, which eMarketer estimates controls nearly 72% of the total revenues spent on search advertising in the U.S.

Under its initial deal with Myspace four years earlier, Google had agreed to make up to $900 million in guaranteed payments for the right to sell ads next to searches on the site. The current agreement will likely be worth less, as the size of the social network's online audience shrinks, say people familiar with the matter.

The number of monthly visitors to MySpace fell to 54 million in November, down 15% from the same time a year ago, according to online measurement firm comScore Media Metrix.

MySpace is under pressure to reverse is flagging fortunes. The site, which was recently repositioned as a social network built around entertainment, has been a drag on News Corp.'s balance sheet. The business segment in which MySpace is lumped lost $156 million in the most recent quarter -- a worse performance than a year ago.

Chief Operating Officer Chase Carey signaled the company's impatience to have it turn a profit, saying on a November call with Wall Street analysts that "this is something that we look to judge in quarters, not years."